AMY DIANNE stoodley Applicant And: ROBERT KEITH stoodley Respondent, 2019 NLSC 165
Opinion
court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR FAMILY DIVISION Citation : Stoodley v. Stoodley , 2019 NLSC 165 Date : September 19, 2019 Docket : 201402F0784 Between: AMY DIANNE stoodley Applicant And: ROBERT KEITH stoodley Respondent Before: Justice Gillian D. Butler Place of Hearing: St. John’s, Newfoundland and Labrador Dates of Hearing: March 12-15, 2019 April 1-5 & 10, 2019 June 28, 2019
Summary: Duration and quantum of spousal support on a compensatory and non-compensatory basis. Characterization of employment benefits received post-separation. Treatment of non-taxable income and benefits (some in foreign currency) for DivorceMate calculations when the payor has no eligibility to claim support against income for tax purposes. Occupation rent principles and calculations. Appearances:
Paul D. Dicks, Q.C. Appearing on behalf of the Applicant Sandra M. Burke, Q.C. Appearing on behalf of the Respondent Authorities Cited: CASES CONSIDERED: Miller v. Miller, 2003 NBCA 37; Yaschuk v. Logan, (NS CA), 39 R.F.L. (3d) 417, 299A.P.R. 278 (N.S.C.A.); Gardiner v. Gardiner, (AB KB), 191 A.R. 139, [1996] A.W.L.D. 1069 (A.B.Q.B.); Boston v.Boston, 2001 SCC 43; Sawchuk v. Sawchuk, 2010 ABQB 5; Thompson v. Thompson, 2013 ONSC 5500; Reid v. Carnduff, 2014 ONSC605; Cassidy v. McNeil, 2010 ONCA 218; Kerr v. Baranow, 2011 SCC 10; Mason v. Mason, 2016 ONCA 725; Banziger v. Banziger,2010 BCSC 179; Chutter v.
Chutter, 2008 BCCA 507; Dagg v. Cameron Estate, 2017 ONCA 366; Gillespie v. Gillespie, 2017 NBQB149; Davis v. Crawford, 2011 ONCA 294; Gosse v. Sorensen-Gosse, 2011 NLCA 58; Young v. Young, (SCC), [1993] 4S.C.R. 3, 49 R.F.L. (3d) 117; Pelley v. Pelley, 2003 NLCA 6. LEGISLATION AND RULES CONSIDERED: Family Law Act, R.S.N.L. 1990,
Chapter F-2; Divorce Act, R.S.C., 1985, c. 3 (2ndSupp.); Federal Child Support Guidelines, SOR/97-175; Supreme Court of Newfoundland and Labrador, 1986, S.N.L. 1986 c42Schedule D,
Part IV. TEXTS CONSIDERED: Simon R. Fodden, Family Law, (Toronto: Irwin Law, 1999); Spousal Support Advisory Guidelines, July2008; S. Christine Montgomery, “Beyond the Formulas – Additional SSAG Considerations”, 2013 (DivorceMate Software Inc.); JamesA. MacDonald & Ann Wilton, The 2019 Annotated Divorce Act (Toronto: Thomson Reuters Canada Limited, 2018); Spousal SupportAdvisory Guidelines: The Revised User’s Guide, April 2016; Julien D. Payne & Marilyn A. Payne, Canadian Family Law, 7th Ed.(Toronto: Irwin Law, 2017).
INDEX INTRODUCTION ................................................................................. 5 FACTS ............................................................................................... 5 The Parties’ Relationship ................................................................. 5 The 2014 Employment Contract ....................................................... 9 The Marriage Breakdown ................................................................. 11 The Interim Orders ........................................................................... 12 Credibility ........................................................................................ 14 ANALYSIS............................................................................................... 16 Issue 1 – Division of Assets Characterization of Retention Bonus ........................................ 16 RRSPs ....................................................................................... 23 Vacation Pay ............................................................................. 24 Household Contents .................................................................. 24 Matrimonial Debt ...................................................................... 24
2014 Income Tax Refund .......................................................... 26 The Joint Bank Account ........................................................... 26 Life Insurance Cash Surrender Value ........................................ 26 2015 Bonus ............................................................................... 27 The Matrimonial Home ............................................................. 27 Issue 2 – Spousal Support Key Principles ........................................................................... 28 Compensatory Spousal Support .............................................. 30 Non-Compensatory Spousal Support ...................................... 31 Conclusion on Basis for Entitlement to Spousal Support ......... 33 Financial Positions of the Parties .............................................. 33 Ms.
Stoodley ....................................................................... 33 Mr. Stoodley ....................................................................... 35 Mr.
Stoodley’s Income .............................................................. 36 2001-2014 ......................................................................... 37 2015-2019 ......................................................................... 38 Converting to Canadian Currency ...................................... 39 Dividends “in lieu” ............................................................ 40 Actual Dividends ................................................................ 41 RRSP Contribution ............................................................ 41 The Remaining Value in the Shares Received as Income ..... 42 Calculation of Income to this Point .................................... 43 The Effect of Post-Separation Salary Increases on Spousal Support ....................................................................... 43 Conclusion on Mr.
Stoodley’s Income ................................ 47 Converting Mr.
Stoodley’s Income to a Line 150 Equivalent 47 Spousal Support Advisory Guidelines ..................................... 49 Retroactive Adjustments to Support ......................................... 51 The First Interim Order ...................................................... 52 The January 2016 Order .................................................... 52 The Second Interim Order .................................................. 53 Support after Judgment is Satisfied .......................................... 55 Duration of Support ................................................................. 55 Security for Support ................................................................. 57 Lump Sum Support .................................................................. 58 Issue 3 – Occupation Rent ............................................................. 60
Issue 4 – Costs Award ..................................................................... 66
SCHEDULE “A” ................................................................................... 73
SCHEDULE “B” ................................................................................... 75
SCHEDULE “C” ................................................................................... 76 SCHEDULES “D1”, “D2”, “D3”, “D4” REASONS FOR JUDGMENT Butler, J. : INTRODUCTION [ 1 ] The issues to be determined in this case are the duration and quantum of spousal support (to which Mr. Stoodley agrees his wife is entitled) and the division of the parties’ matrimonial assets. Both of these issues are complicated by the terms of Mr. Stoodley’s employment. I must characterize the nature of a post-separation employment benefit and determine Mr. Stoodley’s annual income since separation.
His compensation package has been comprised of wages and benefits (largely payable in U.S. dollars) and shares and dividends (in Canadian dollars), the majority of which have been tax exempt since he took residency in the United Arab Emirates (“UAE”). facts The Parties’ Relationship [ 2 ] The parties were born in 1963 and 1964, respectively, and grew up in this Province. [ 3 ] By 1984 Ms. Stoodley had completed her Commercial Art program from the College of North Atlantic and was married. Mr.
Stoodley had obtained his Bachelor of Science Honour’s Degree in Marine Biology from Memorial University and had started work for the Federal Department of Fisheries in St. John’s. In 1986 Mr. Stoodley left the Province to attend the University of British Columbia and ultimately obtained his MBA in International Business and Finance. Meanwhile, Ms. Stoodley had relocated to the province of Nova Scotia where she attended the College of Arts and Design and had her first child on October 15, 1985 (“Amy”). [ 4 ] By 1988 Ms.
Stoodley’s first marriage had failed and she returned to Newfoundland and Labrador where she and Amy temporarily resided with her parents. Coincidentally, Mr. Stoodley returned from British Columbia around the same time and the two met shortly thereafter. [ 5 ] By 1990 Mr. Stoodley had moved into Ms. Stoodley’s unit at the Janeway apartments, which accommodation was available to Ms. Stoodley at a reasonable rent because she was working 12-hour shifts at the hospital as a respiratory technician. Mr. Stoodley was working at Newfoundland Hydro and pursuing his Certified Management Accountant designation.
Later in 1990 Mr. Stoodley went to work for the Provincial Department of Fisheries. [ 6 ] Since their relationship commenced Mr. Stoodley has assumed the role of father to Amy. [ 7 ] Following their marriage on February 16, 1992 the couple constructed their first dwelling on a parcel of land in Conception Bay South, the bulk of which had been gifted from Ms. Stoodley’s parents. This property was supplemented with land purchased from a neighbour to allow for an appropriate building lot.
When this house was ready for occupancy in July 1992 it carried a mortgage of $90,000. [ 8 ] The couple’s only biological child (“Sarah”) was born on September 28, 1993 following which Ms. Stoodley took several months maternity leave and on her return to the hospital, accepted the position as Art Therapist in the Psychiatry Department. Meanwhile Mr. Stoodley had gone to work with the Federal Department of Foreign Affairs as a Development Officer.
By this time it was acknowledged that he was required to travel outside the Province approximately one week every two months. [ 9 ] In 1995 the parties jointly decided that Ms. Stoodley should leave her employment and dedicate herself to the home and
children. She did, however, supplement the family’s income with some casual interior decorating for friends. [ 10 ] In 1996 Mr. Stoodley went to work with The Lotek Group Inc. (“Lotek”) as Vice President-Marketing and his travel gradually increased associated with trade shows for different societies in which he was a member. Between 1993 (when he was with the Department of Foreign Affairs) and 2005 (when his employment with Lotek ended), Ms.
Stoodley had accompanied her husband on trips associated directly or indirectly with his employment to Bangkok, Las Vegas, San Diego, Monterey, Costa Rica, New Orleans, Hawaii, Australia, South America, Sicily, England, Malaysia and the Maldives. [ 11 ] Between 1995 and 2005 Mr. Stoodley’s income essentially represented the sole source of family support. Mr. Stoodley testified that in this period it had not exceeded $80,000 a year but it was established that his earnings have exceeded $115,000 annually since 2001. I accept however that a portion of Mr.
Stoodley’s earnings from Lotek was in the form of corporate shares held within his RRSP and that what the family relied upon for their expenses of daily living was his base salary. [ 12 ] The family travel (described above) was therefore only possible as a result of the accumulation of travel points associated with Mr. Stoodley's business travel (used for Ms.
Stoodley’s airfare) and accommodations that were paid for by his employer. [ 13 ] The evidence established that payment on family debt was not a priority to the Stoodley family and by 1999 their mortgage had increased to $102,750. [ 14 ] By 2002 the couple had sold their home on Partridge Place for $174,500 and some of the equity received was used to buy shares in The Lotek Group Inc.
Their new home on Joshua Street in Paradise was purchased the same year for $250,000, had associated debt of $231,200 and still required considerable work on the grounds and exterior. [ 15 ] By 2003 Sarah was age 10 and attending Topsail Elementary; Amy was 18 and attending Memorial University in the Department of Political Science. Unfortunately, in February 2005 Mr. Stoodley’s career at Lotek came to an abrupt end and in the 12 months following Mr. Stoodley was largely unemployed. He did complete some contract work as a consultant for Memorial University through a proprietorship he created known as Ocean Touch.
In this one year period there was limited income and little or no business or family travel. [ 16 ] The November 22, 2006 affidavit filed by Mr. Stoodley in support of his Interim Application for relief from oppression (related to his wrongful dismissal action) referenced a very stressful time for the family. At paragraph 33 he stated in part: We have exhausted our life savings. We have had to exercise the cash surrender value of our life insurance policies. We have had to re- mortgage our home. We have had to forego investment opportunities … [ 17 ] Mr.
Stoodley’s wrongful dismissal lawsuit against his former employer was later settled essentially for the value of the shares which were held in the names of both parties but the majority of which were held in Mr. Stoodley’s RRSP. [ 18 ] A major turning point in Mr. Stoodley’s career came in February 2006 when he accepted a position with Provincial Aerospace Ltd. (“PAL”) as Vice President of Sales and Marketing. His contract of employment entitled him to a salary of $120,000 to be reviewed annually, participation in the incentive plan and a monthly car allowance of $500. Mr.
Stoodley was also entitled to full reimbursement for “reasonable expenses actually incurred in the course of employment in accordance with the Employer’s Policies” as well as full participation in all benefit plans (medical, hospital and extended healthcare and life insurance). The contract of employment permitted Mr. Stoodley to continue his current business relationship with Ocean Touch. [ 19 ] There was no evidence presented of a subsequent contract of employment until July 2014. [ 20 ] The eight year period between the summer of 2006 and the summer of 2014 deserves particular consideration.
In 2006 the children were aged 21 and 13 years, respectively, and one was in university out of the Province between 2007 and 2008. The debt on Joshua Street had increased to $300,000. Mr. Stoodley’s business travel had increased to at least one and a half to two weeks every month and, at its peak, exceeded 200 days a year. [ 21 ] The younger daughter had some medical issues requiring surgery in Halifax in 2010. By 2011 the younger daughter had completed her grade 12 and the older daughter had married. In the period 2009 to 2014, Mr.
Stoodley’s income (including bonuses) averaged $338,356. [ 22 ] In July 2011 and January 2012, respectively, PAL Middle East FZE and PAL LLC were created. These corporations were related to a venture for PAL in the UAE which arose because of PAL’s expertise and experience in refurbishing aircraft with military- grade radar capability for iceberg tracking. [ 23 ] In the spring of 2014 two significant events occurred. Mr. Stoodley commenced a romantic relationship with a PAL colleague and, unrelated to this development, Mr. Stoodley learned that PAL may be sold.
Associated with this potential sale and the key importance of PAL’s venture in the UAE, Mr. Stoodley successfully negotiated a new employment contract that provided for a generous retention bonus. The 2014 Employment Contract [ 24 ] Under the terms of the July 2014 contract (the “July Contract”) executed by PAL and Mr. Stoodley, Mr.
Stoodley agreed to continue his employment (notwithstanding the sale of the company to Exchange Income Corporation (“EIC”)) and in return was entitled to a base salary, incentive, RRSP benefit, a financial package in replacement for the health benefit and another financial package for the cost to replace the vehicle benefit. [ 25 ] His base salary was established in 2014 at $200,000, $205,000 in January 2015, $210,000 in January 2016 and thereafter would be “reviewed annually and adjusted upwards at the discretion of the employer”. The incentive entitled Mr. Stoodley to receive annually
two percent of the PAL Aerospace Ltd.’s profit in excess of $5,000,000 to be earned as of December 24th annually and paid out in part on December 24th and the remainder within 30 days of the completion of the annual audit. [ 26 ] Mr.
Stoodley was entitled to a vehicle and gas card as well as full reimbursement for reasonable maintenance and repairs, an annual contribution in the amount of the maximum allowable annual contribution (as defined by Canada Revenue Agency) to an RRSP benefit but not to exceed $25,000, the continuation of the health benefit and four weeks paid vacation. [ 27 ] Most significantly, Appendix B to the July Contract set out the terms of a retention bonus (the “Original Retention Bonus”) payable in addition to the salary and benefits reviewed in the preceding paragraphs. This entitled Mr.
Stoodley to the sum of $1,700,000 Canadian payable: (i) $800,000 within 10 working days following the sale; (ii) $450,000 to be paid on or before one year following the sale; and (iii) $450,000 to be paid on or before two years following the sale. [ 28 ] An amended agreement was signed in December 2014 (the “December Contract”) and entitled Mr. Stoodley to shares in EIC instead of the $1,700,000 (the “Amended Retention Bonus”). By virtue of this contract, a trust was established and it acquired 144,908 common shares in the capital stock of EIC (“Retention Shares”) to be held for Mr.
Stoodley until the conditions for the transfer and delivery of the Retention Shares to the employee were satisfied. [ 29 ] The contractual terms were satisfied and the evidence supports the conclusion that Mr. Stoodley became entitled to receive one- quarter of the Retention Shares in January 2016, one-quarter in January 2017, one-quarter in January 2018 and one-quarter in December 2018. The details of this generous Amended Retention Bonus are discussed later in this Decision. The Marriage Breakdown [ 30 ] Unfortunately, in the summer of 2014 (mere days after the execution of the July Contract) Mr.
Stoodley admitted to an affair. The couple attempted a reconciliation and went on a fishing trip to Labrador in August but the separation proved inevitable and the parties have lived apart since September 17, 2014. Ms. Stoodley and Sarah have remained in the Joshua Street home which had an associated secured line of credit with a balance of $300,000 outstanding on the date of separation. [ 31 ] Regarding family finances before their separation, the evidence supports that: 1. This was Mr. Stoodley’s sole domain; 2. Ms. Stoodley trusted him to make appropriate financial decisions for the family; 3. Mr.
Stoodley established the spending priorities and chose an enhanced lifestyle for the family over debt-reduction; and 4. Ms. Stoodley signed any third party records required to support Mr. Stoodley’s decisions in this regard, without question. [ 32 ] Because of the lifestyle that the Stoodley family had lived prior to separation, it was normal for the family to utilize their secured and unsecured lines of credit to cover expenses of daily living until the receipt of Mr. Stoodley’s bonuses.
Once the bonus was received (always by April of the next year but sometimes partially in December of the prior year with the balance in April) it became the family practice to pay off the credit cards and unsecured line of credit and, if possible, pay down on the secured line of credit. Mr. Stoodley did not consider the $300,000 secured line of credit (treated as a mortgage) as a significant debt and its reduction was not a priority. [ 33 ] In addition, Mr. Stoodley had been utilizing the family accounts and/or travel points to cover considerable expenses associated with his infidelity.
These included trips with his girlfriend in March 2014 to Chicago, May 2014 to Calgary, and July 2014 to Barbados. Mr. Stoodley had also incurred expenses for flowers, ladies clothing, Air Canada charges for use of points for travel, wineries, meals and e-transfers of cash for his girlfriend. [ 34 ] It followed that on the day of separation, the Stoodley’s joint account was in overdraft and their credit cards and secured and unsecured lines of credit were at their limits. Ms.
Stoodley was left in an extremely vulnerable financial position and was both unaccustomed and ill-equipped to handle monetary matters. [ 35 ] This evidence is relevant only to the need to make adjustments to the division of the parties’ matrimonial assets and debts as they existed on the day of separation. The Interim Orders [ 36 ] On November 28, 2014 an Interim Spousal Support Order entitled Ms. Stoodley to receive $9,000 per month and in addition, Mr.
Stoodley was obliged to: • pay the premiums and maintain all existing policies of life insurance on his life and maintain the existing beneficiary designation on his Estate; • pay the premiums and maintain the existing health insurance coverage for Ms. Stoodley and Sarah Stoodley; • pay the premiums and maintain the existing policy of insurance on the matrimonial home; • pay the monthly installment payments for the loan outstanding in respect of the motor vehicle operated by Sarah Stoodley; and
• pay the premiums and maintain motor vehicle insurance on the motor vehicles operated by Ms. Stoodley and Sarah Stoodley. [ 37 ] From the spousal support she was to receive, Ms. Stoodley was required to pay the operating expenses associated with her occupation of the home, including cable, internet, telephone, electrical, oil and propane; pay the monthly interest installment on the joint line of credit secured against the matrimonial home and the monthly installment payment due and owing for the motor vehicle that she operated.
No reference was made to property taxes. [ 38 ] The Interim Spousal Support Order does not reference Mr. Stoodley’s income but the decision was given orally and on review, I am satisfied that Justice Fry relied on Mr. Stoodley’s 2013 Line 150 income of $290,816. The subsequent Interim Child Support Order of January 7, 2016 (which required Mr. Stoodley to pay $1,500 per month for Sarah and full tuition, books and other required program costs and fees while she remained a full-time student) was achieved by consent and was silent on Mr. Stoodley’s income. It did, however, confirm that Mr.
Stoodley was to continue to be “responsible for Sarah’s car payment and insurance.” [ 39 ] In April 2015 Mr. Stoodley became a resident of the UAE where he has continued his employment with PAL. His base salary, bonus and benefits are paid in U.S. dollars. The shares that have been transferred to him annually since 2015 and the dividends associated therewith (both “in lieu” and actual) are paid in Canadian dollars. He files Canadian income tax returns but minimal taxes have been payable on his worldwide income since April 2015. [ 40 ] On October 1, 2018 the Interim Spousal Support Order was varied and Mr.
Stoodley was ordered to pay $24,000 monthly. At paragraph 6 of the written decision, Justice MacDonald confirmed his conclusion that Mr. Stoodley’s income had increased dramatically since the Interim Order but at paragraph 7 he expressed uncertainty respecting the taxable and non-taxable portions of Mr. Stoodley’s then current income.
At paragraph 8 Justice MacDonald noted the differences between Line 150 income and non-taxable employment income for the years 2015 to 2017, and at paragraphs 20 and 21 of this decision, he confirmed that the $24,000 monthly spousal support was an average of: • the $18,000 a month that would be payable on $350,000 non-taxable income (because the Spousal Support Advisory Guidelines express caution in the use of DivorceMate software calculations for incomes in excess of $350,000); and • the DivorceMate software calculation on Mr.
Stoodley’s 2015 income ($298,115 taxable and $249,752 non-taxable) which suggested $31,000 per month in spousal support. [ 41 ] As will be apparent, my conclusion on Mr. Stoodley’s 2013 income matches Justice Fry’s conclusion in 2014. However, my conclusion on Mr. Stoodley’s 2015-2019 income is very different from that which formed the basis of the 2018 Interim Order in large part because additional disclosure of Mr. Stoodley’s income and benefits continued after October 1, 2018. Credibility [ 42 ] I would describe Dianne Stoodley as sincere in her attempt to provide accurate and relevant evidence. However, Ms.
Stoodley proved to be a poor historian and was confused about the dates of many key events (for example, when she had been in attendance at the College of Arts and Design, and when she first met Mr. Stoodley). [ 43 ] Ms. Stoodley acknowledged her confusion and described this as a recent development which she attributed to the tremendous stress that she has endured since 2014. Regardless of its cause, I do not find that it affected Ms. Stoodley’s overall credibility. She was mistaken on the timing of specific trips, who employed Mr.
Stoodley in a particular year and other key dates, but on the whole I accept that she provided an accurate snapshot of the roles played by each spouse during the marriage, the lifestyle they enjoyed and how they managed difficult periods. [ 44 ] Mr. Stoodley was an excellent historian and was seldom challenged on a key date. However, overall, I conclude that he was not consistently forthright.
Answers to key inquiries (whether in the form of written questions in advance of trial or during cross- examination) were sometimes misleading, incomplete and on rare occasions, false. [ 45 ] One example will serve to support my concern. Mr. Stoodley was asked during cross-examination about certain expenses covered by the joint account in the period just prior to separation. The largest of these was a cheque written for $6,500 representing the cost of his annual fishing trip to Labrador. On several different occasions Mr.
Stoodley said that he had not been reimbursed for the trip that he lost as a result of his having to be in Toronto in July. However, on cross-examination it was disclosed that Mr. Stoodley claimed the cost of this lost trip on an expense claim with his employer and was fully reimbursed. The money, however, did not get re-deposited to the parties’ joint account post-separation. In addition, I find that this amount (to which Mr. Stoodley believed he was entitled) should have been disclosed as an accounts receivable existing on the day of separation. [ 46 ] In a subsequent
section of this Decision I address how the lack of candour in pre-trial disclosure is relevant to costs. At this stage, I state only that despite three Demands to Disclose and five Notices to Reply to Written Questions, a full appreciation of all benefits Mr. Stoodley was to receive, and ultimately did receive, under the contracts he signed, was not possible until trial. [ 47 ] Mr. Stoodley testified that he plans to retire within three years and return to Newfoundland and Labrador but he provided no details on alternate employment or replacement sources of income.
The established lack of pre-trial disclosure and lack of candour during his testimony causes me to doubt whether Mr. Stoodley has been completely candid and transparent about his future plans. analysis Issue 1 – Division of Assets Characterization of the Retention Bonus [ 48 ] At the time of the parties’ separation (agreed to be September 17, 2014), the July Contract established Mr. Stoodley’s
compensation package. [ 49 ] Under paragraph 1(
a) of the July Contract Mr. Stoodley undertook the duties of Chief Development Officer on the terms earlier outlined (base salary, bonus and benefits). His duties included assistance in the “development end … establishment of UAE LLC and” establishment of the “Business Development Plan for the UAE LLC.” [ 50 ] Since a “change of control in PAL” was contemplated as of July 10, 2014, Appendix B set out the terms of the Retention Bonus to which Mr.
Stoodley would be entitled if: • He used his best efforts as Chief Development Officer to achieve maximum value for the shareholders; and • The sale occurred prior to December 31, 2014 or was announced by that date with an executed agreement contemplating completion at a later date. [ 51 ] The evidence supports the conclusion that this Retention Bonus was requested by Mr. Stoodley in recognition of his service between 2006 and 2014 and as a condition of the contribution he was making (as Development Officer) to the potential sale.
He was not willing to promote PAL to potential purchasers without a financial incentive because PAL’s purchaser may not require his services. [ 52 ] As previously described, the Retention Bonus was $1,700,000 Canadian payable in three instalments within two years of the change of control. The first $800,000 was payable within 10 days of sale and two installments of $450,000 were to follow on December 2015 and December 2016. However, if Mr.
Stoodley’s employment was terminated within 180 days of the sale or he resigned within 180 days of a “change affecting the Executive’s employment” as defined, the full $1,700,000 was payable. [ 53 ] Two months after their separation, the December Contract was signed and under its terms Mr. Stoodley’s Retention Bonus was specified to be payable for the purpose of promoting “retention of the employee” (para. 1(a)). Appendix B of the July 10, 2014 agreement was substituted in full.
The employer committed to “contribute sufficient funds to the … Trust to be established …” and “to allow the Trust to acquire 144,908 common shares in the capital stock of EIC… which the Trust will hold until the conditions for the transfer and delivery of the Retention Shares to the Employee are satisfied” (para. 1(a)). Until delivered, Mr. Stoodley had no “incidents of ownership” in the Retention Shares including any right to dividends. [ 54 ] Mr.
Stoodley explained (and I accept) that once EIC had disclosure of the compensation packages for PAL executives, it expressed the need to substitute any retention bonuses with retention shares. Mr. Stoodley was advised of this and considered it non- negotiable. He was asked only to elect a date for the share value to be locked in, which he did, and he was subsequently presented with a draft Amending Agreement. [ 55 ] It is significant to the characterization of the Amended Retention Bonus that each transfer of shares was specifically tied to Mr. Stoodley’s continued employment. Paragraph 1(a)(
i) made the first receipt of one-quarter of the Retention Shares conditional on Mr. Stoodley’s employment on the first anniversary date of the sale to EIC. Paragraphs 1(a)(ii)-(iv) provided similarly for the remaining three entitlements to one-quarter of the Retention Shares and paragraph 1(
c) tied Mr. Stoodley’s right to dividends to his continued employment. [ 56 ] In essence, the character of the employment benefit to which Mr.
Stoodley was entitled changed from a Retention Bonus that guaranteed him $800,000 on the sale of the company and another $900,000 if he worked two years, to one that provided no guarantee, was conditional on four years of future employment but was potentially more valuable. [ 57 ] If either the Retention Bonus or Retention Shares are characterized as severance pay, I conclude that it would be a matrimonial asset divisible between the parties on a formula that reflects the portion related to Mr.
Stoodley’s eight years of service with PAL prior to separation and the subsequent years of employment that were required to receive payment in full. [ 58 ] If the Amended Retention Bonus is characterized as part of a compensation package for four years future employment (January 2015 – December 2018) with Retention Shares to be transferred annually but conditional on each subsequent year’s employment, the Amended Retention Bonus could not be characterized as a matrimonial asset but could potentially be relevant to the calculation of spousal support. [ 59 ] Counsel for Mr.
Stoodley admitted that since the Family Law Act , R.S.N.L. 1990
Chapter F-2 , establishes the date of separation as the valuation date for assets, and since Mr. Stoodley’s right to the Retention Bonus vested in July 2014, as of September 17, 2014, the $1,700,000 represented a divisible matrimonial asset, to be valued net of tax (using Mr. Stoodley’s rate of 51.3 percent) warranting payment to Ms. Stoodley of $413,960. Citing Miller v. Miller , 2003 NBCA 37 , counsel for Mr. Stoodley likened the Retention Bonus to a stock option that has vested and suggested that Mr. Stoodley had a contingent but unmatured right to the funds. [ 60 ] Counsel for Ms.
Stoodley argued that the Retention Shares, dividends in lieu and actual dividends represented a substitute for the Original Retention Bonus that Mr. Stoodley never received. He suggested that Ms. Stoodley was entitled to one-half of the 144,908 shares valued at approximately $4,800,000 and that income from Mr. Stoodley’s half of the shares should be included in the calculation of his income for spousal support purposes. [ 61 ] As addressed herein, the evidence supports that the monetary value of the Retention Shares ultimately received greatly exceeded the $1,700,000 contemplated in the July Contract.
Before consideration of dividends, the 144,908 shares were estimated in December 2014 to be worth approximately $2,300,000 but ultimately were valued at approximately $4,800,000. Mr. Stoodley has since liquidated some shares and at the conclusion of the trial, held 85,981 shares valued at $2,401,563. [ 62 ] It is understandable that the timing of the change in the nature and terms of Mr. Stoodley’s Retention Bonus would draw suspicion from Ms. Stoodley.
However, I am satisfied that EIC, as a publicly traded corporation, required consistency in the terms of executive compensation and that this drove the terms of the December Contract. By this time, however, I am also satisfied that Mr. Stoodley recognized that his relocation to the UAE was likely. He was separated, estranged from the children, who were now adults, and
he was under considerable financial stress. These combined factors led to his decision to seek non-resident status. [63] Mr. Stoodley’s relocation occurred in April 2015 and a new mandate letter was executed in January 2016 but effective June 11,2015. Two amended contracts of employment were signed in July 2016. Mr. Stoodley became Chief Executive Officer – PAL MiddleEast FZE and was required to maintain permanent residency in the UAE. He also became Chief Executive Officer of PAL LLC. Underthese two contracts Mr.
Stoodley’s remuneration in US dollars was established as follows: Salary $174,000 (from PAL LLC) and $10,000 (PAL LZE)Utilities $650 per month allowance RRSP $25,000 monthly but paid as an end of service gratuity asper UAE labour lawsVehicle Lease not to exceed $1,114 per monthAccommodation(
s) Lease not to exceed $71,000 per yearTravel $1,667 per month effective January 2016 [64] Mr. Stoodley was also entitled to full gas and maintenance coverage, medical and dental insurance and 20 days paid annualleave. The Retention Shares to which he was entitled under the December 2014 Contract were not referenced in the July 2016 Contractsbut they continued to accumulate under the terms of the December Contract. [65] The evidence I received respecting details of PAL’s operations in the UAE is sensitive and confidential and has been sealed. Asa result, I will make only a general
summary of Mr. Stoodley’s corporate and personal circumstances in the UAE. [66] Residing in the UAE is not a choice many people would make. This small but prosperous middle east country is comprised ofseven emirates, the largest of which is Abu Dhabi, and oil is the region’s principal commodity. The UAE sits between Saudi Arabia,Qatar and Oman, and is across the Persian Gulf from Iran and Iraq. It is in close proximity to Pakistan to the north and Somalia to thesouth, each of which is on the Arabian Sea. Neither the relative peace nor the civil rights protection we enjoy in Canada can be expectedin this region.
It is recognized as a geo-politically volatile area and western companies operating there would be wise to have evacuationplans for their employees. As his January 2016 mandate letter establishes, maintenance of PAL’s corporate relationships with themilitary and the state are conditional upon both Mr. Stoodley’s good behaviour and solid personal relationships with key UAE officials.
Breach would likely result in the requirement that he swiftly depart. [67] In addition to the changes in the nature of its payment (cash versus shares) and its ultimate value ($1,700,000 versus$4,800,000) , I accept that the differences between the Original Retention Bonus to which Mr. Stoodley was entitled as of the date ofseparation and the Amended Retention Bonus negotiated in December 2014 are: • $800,000 of the Original Retention Bonus was guaranteed on the sale of the company.
The remaining $900,000 wasconditional on two years future employment but on death prior to the two year payment schedule, the full $1,700,000 was payable to hisestate. • The Amended Retention Bonus was still tied to PAL’s sale but each of the four tranches of shares to be transferred wereconditional on a full year of future service by Mr. Stoodley related to the development of his employer’s operations in the UAE. Neitherthe transfer nor the transfer price of the shares was guaranteed. [68] The personal sacrifices made by Mr.
Stoodley and the risks he undertook to qualify for the Amended Retention Bonus under theDecember Contract were his own. They were not sacrifices or risks required of Ms. Stoodley and they were unrelated to Mr. Stoodley’semployment during the marriage. He alone accepted the gamble on the value of the shares and whether he would be able to meet theconditions for their annual transfer. [69] In this jurisdiction, Parts I and II of the Family Law Act provide for the deferred sharing of matrimonial assets as defined insection 18(1)(
c) as follows: (c) "matrimonial assets" includes all real and personal property acquired by either or both spouses during the marriage, with theexception of, (
i) gifts, inheritances, trusts or settlements received by 1 spouse from a person other than the other spouse and an appreciation invalue of them during the marriage, (ii) personal injury awards, except the portion of the award that represents compensation for economic loss, (iii) personal effects, (iv) business assets, (
v) property exempted under a marriage contract or separation agreement, (vi) family heirlooms, and (vii) real and personal property acquired after separation. [70] On these facts I conclude that the Original Retention Bonus under the July 2014 contract was an asset to be divided between theparties. It reflects compensation for the loyal and dedicated service provided by Mr. Stoodley to PAL between 2006 and 2014 but alsorequired his commitment to two future years of service which he provided after separation (Yaschuk v. Logan, (NS
CA), 39 R.F.L. (3d) 417, 299 A.P.R. 278 (N.S.C.A.) and Gardiner v. Gardiner, (AB KB), 191 A.R. 139, [1996]A.W.L.D. 1069 (A.B.Q.B.)). [71] In order to divide only that portion that was acquired during the marriage, the formula for its division is therefore: number of years of service during marriage (8)number of years of service for full payment (10)x $1,700,000 = $1,360,000 [72] Ms. Stoodley is entitled to half of this asset ($680,000). [73] The Family Law Act does not define value but jurisprudence establishes the need to assign fair value to each matrimonial asset.
This includes an assessment “of whether the notional costs (such as taxation) should be taken into account” (Simon R. Fodden, FamilyLaw, (Toronto: Irwin Law, 1999) at 229). [74] I accept that notional taxes should only be deducted where a sale attracting tax consequences was probable or taxes wereactually paid (Fodden at pgs. 229-230). [75] Since the evidence supports the conclusion that the form of the Original Retention Bonus changed to Retention Shares whichwere received while he was a non-resident, little or no taxes were payable by Mr. Stoodley.
In these circumstances, it would be artificialand unfair to deduct taxes against the $680,000 due to Ms. Stoodley. [76] It follows from my characterization of $1,700,000 in value of the Retention Shares as an asset (of which $1,360,000 is to bedivided equally between the parties to reflect the portion relevant to Mr. Stoodley’s service during the marriage) that: • The first $1,360,000 in value of the Retention Shares Mr. Stoodley later received (as a replacement for the $1,700,000Retention Bonus) must be excluded from consideration in the calculation of Mr.
Stoodley’s income because to include it would representdouble-dipping (Boston v. Boston, 2001 SCC 43); • The remaining value in the Retention Shares Mr. Stoodley received is exempt from division as property acquired afterseparation but may be relevant to the calculation of spousal support. • Income generated on the Retention Shares Mr.
Stoodley received (dividends in lieu, dividends or interest on proceeds of sale)may be relevant to the calculation of spousal support. [77] In a later portion of this Decision I consider whether the remaining value in the Retention Shares and/or the dividends andinterest associated with these should be considered in the calculation of Mr. Stoodley’s income for purposes of spousal support. RRSPs [78] The parties acknowledge that they held RRSPs at the time of separation valued at $742,324.96.
Since I have considered Mr.Stoodley’s employer’s contribution of $25,000 in 2015 as part of his income, there must be an adjustment to the value of the asset to bedivided. Also, the parties agree that the value of the parties’ RRSPs has fluctuated considerably since the date of separation. [79] In light of these facts, I accept that the most reasonable manner to address the division of these assets would be to require Mr.Stoodley to rollover to Ms. Stoodley tax-free, 48.37 percent of the value of the RRSPs at the time of judgment.
Counsel agree that this issupported by the following calculation: Value at separation $742,324.96 Contribution $25,000.00 $767,324.96 ½ x $742,324.96 = $371,162.48 $371,162.48 = 48.37% $767,324.96 Vacation Pay [80] Mr. Stoodley’s accrued vacation pay on the date of separation was valued at $3,843.75 before tax. Mr. Stoodley’s counselsuggests that at a marginal rate of 50 percent, the net value is $2,306.25 and she concedes that Mr. Stoodley owes Ms. Stoodley$1,153.13 for her net interest. [81] Ms. Stoodley’s counsel suggests that income tax should not be a consideration because Mr.
Stoodley did not receive the fundsbut instead, used his vacation time. [82] I refer again to Fodden’s text at page 229 and accept that while it has been a practice in this jurisdiction to deduct taxes in thesecircumstances, Mr. Stoodley utilized the benefit of this asset five years ago without tax consequences. I would therefore accept that the
value was $3,843.75 and that Ms. Stoodley is due $1,921.87. Household Contents [ 83 ] By the conclusion of trial the parties were agreed that Mr. Stoodley would receive the items listed on the relevant exhibit with the exception of the crystal vase from Poland, without any payment due from Ms. Stoodley. Matrimonial Debt [ 84 ] On the date of separation the parties had debts in three categories.
The balances reflected below are as of the date of separation (where the debt was repaid) and otherwise as of January 2019: Credit Cards Bank of Nova Scotia (xxx 4018) ($1,699.72) TD Visa (xxx 0642) ($17,832.36) Line of Credit TD PLC (xxx 0778) ($298,738.10) TD PLC (xxx 8296) ($30,047.93) Loan Bank of Nova Scotia ($19,000.00) Student Line of Credit ($7,740.00) [ 85 ] I accept that Mr. Stoodley eliminated the credit cards balances post-separation and he therefore seeks reimbursement for half the balances after deduction of non-matrimonial expenses incurred on these cards during the marriage.
He asserts that these non- matrimonial expenses amount to only $1,542.49. [ 86 ] While there was some suggestion by Ms. Stoodley that there may have been more expenses in this category, I accept that the passage of time and Ms. Stoodley’s lack of familiarity with the family finances made accounting very difficult. I accept Mr. Stoodley’s calculation and as a result, Ms. Stoodley owes Mr.
Stoodley $8,994.79 to account for the credit card debt calculated as: $1,699.72 $17,832.36 $19,532.08 less $1,542.49 = $17,989.59 ÷ 2 = $8,994.79 [ 87 ] The secured line of credit (xxx 0778) will be addressed in the discussion of the matrimonial home as it has been treated as the parties’ mortgage. The unsecured line of credit was repaid by Mr. Stoodley and I agree that he is entitled to receive $15,023.96 from Ms. Stoodley to account for this debt. [ 88 ] Both the Interim Spousal Support Order in December 2014 and the subsequent child support order of January 2016 required Mr.
Stoodley to make payments on Sarah’s car loan. As such, the debt payments are properly characterized as part of child support. Mr. Stoodley also concedes that he should be solely responsible for Sarah’s student line of credit at the Bank of Nova Scotia, which he has repaid. [ 89 ] In
summary, to divide the parties’ matrimonial debt, Ms. Stoodley owes Mr. Stoodley $24,018.75, calculated as $8,994.79 plus $15,023.96. 2014 Income Tax Refund [ 90 ] It is agreed that in 2015 Mr. Stoodley received a 2014 income tax refund of $13,315.35 and that Ms. Stoodley is entitled to half of this pro-rated to the date of separation. I calculate that as follows: 260 x 13,315.35 ÷ 2 = $4,742.45 365 The Joint Bank Account [ 91 ] That leaves for division the parties’ joint bank account which the parties agree had an overdraft balance of ($2,834) on the date of separation. However, the evidence established that Mr.
Stoodley subsequently received reimbursement of $6,500 for the lost fishing trip incurred on this account. This considered, I accept that Mr. Stoodley owes Ms. Stoodley the sum of $1,833 calculated as: ($2,834)
$6,500 $3,666 ÷ 2 = $1,833 Life Insurance Cash Surrender Value [ 92 ] On the day of separation the cash surrender value of Mr. Stoodley’s life insurance police with Sun Life was $14,705.09. Ms. Stoodley’s policy on the same date had a value of $3,573.69 and I accept that there is a balancing payment due by Mr. Stoodley of $5,565.70. These assets require no adjustment for income taxes. 2015 Bonus [ 93 ] Counsel are not in agreement as to the treatment of this asset. Mr. Stoodley’s position is that it should be treated as property and Ms.
Stoodley’s position is that it should be treated as income in the year received and relevant to support. [ 94 ] I have explained earlier herein how the family managed their finances prior to separation. They relied on the bonus and essentially spent it before it was received. It was considered by them as income. The interim orders established interim spousal support using income which included bonuses. For these reasons, I agree with Ms. Stoodley’s position and I shall address the 2015 bonus in my calculation of Mr. Stoodley’s income for spousal support purposes. The Matrimonial Home [ 95 ] Mr.
Stoodley requests the right of first refusal to purchase Joshua Street. Ms. Stoodley accepts that the property is no longer ideal for her circumstances and that a home requiring less maintenance and upkeep would be more appropriate for herself and Sarah. [ 96 ] In these circumstances, it is appropriate to grant Mr. Stoodley the first right to purchase Ms. Stoodley’s net one-half interest and assume the parties’ secured line of credit on the following terms: 1.
By October 31, 2019 counsel shall agree on an acceptable residential appraiser who will be jointly engaged and the parties shall share the cost of an appraisal of the matrimonial home. 2. Mr. Stoodley shall indicate by November 30, 2019 if he wishes to purchase Ms. Stoodley’s interest, which interest shall be calculated as: one-half of (appraised value less the secured line of credit). 3. If Mr. Stoodley does not wish to purchase Ms. Stoodley’s interest and if Ms. Stoodley is not interested in purchasing Mr.
Stoodley’s interest for the same price, the home shall be listed for sale by an agent selected by counsel and engaged by the parties jointly. On sale the net proceeds will be held in trust by counsel for Ms. Stoodley pending satisfaction of the remaining terms of the judgment to be prepared and filed under this decision. Issue 2 - Spousal Support Key Principles [ 97 ] The Divorce Act , R.S.C., 1985, c. 3 (2nd Supp .), states four objectives for a spousal support order at
section 15.2 :
(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should (
a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (
b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; (
c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (
d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time. [ 98 ] I accept the following
summary of key principles from Sawchuk v. Sawchuk , 2010 ABQB 5 , paragraphs 8 , 9 and 11 : 8
Section 15.2 of the Divorce Act , R.S. 1985, c. 3 (2nd Supp .), governs applications for spousal support orders. Pursuant to s.15.2(4), the factors a Court is to consider when addressing spousal support are as follows: 1. the length of time the spouses cohabited (s.15.2(4)(a)); 2. the functions performed by each spouse during cohabitation (s.15.2(4)(b)); 3. any order, agreement or arrangement relating to support of either spouse (s.15.2(4)(c));
4. the condition of each spouse (s.15.2(4)); 5. the means of each spouse (s.15.2(4)); 6. the needs of each spouse (s.15.2(4)); and, 7. the other circumstances of each spouse (s.15.2(4)). 9 The common law has also expounded different theories justifying spousal support. Three now exist: compensatory, non-compensatory, and contractual. The leading Supreme Court authorities remain Moge v. Moge, (SCC), [1992] 3 S.C.R.813 (S.C.C.), and Bracklow v. Bracklow, (SCC), [1999] 1 S.C.R. 420 (S.C.C.). … 11 In Gardner v. Gardner, 444 A.R. 271, 2008 ABQB 527 (Alta.
Q.B.), Manderscheid J. described the difference betweencompensatory and non-compensatory support: 26 Compensatory support was explained by Conrad J.A., speaking for our Court of Appeal in Corbeil v. Corbeil, 2001 ABCA 220, 286A.R. 330 (Alta. C.A.) at para. 45: Essentially, compensatory support intends that both spouses profit from the joint venture of marriage. The question is not what thedisadvantaged spouse would have achieved had he or she not entered the marriage.
Rather, the question is what was that spouse'scontribution to the marriage and was the other spouse advantaged by that contribution. …. 28 Non-compensatory support was considered by McLachlin J. in Bracklow. She held that the impacts of the marriage breakup, asdistinct from the marriage itself, could be such that non-compensatory support is mandated.
She held, at para. 43, that non-compensatorysupport is based on the needs and means principle, the idea being that "spouses may have an obligation to meet or contribute to the needsof their former partners where they have the capacity to pay, even in the absence of a contractual or compensatory foundation for theobligation. Need alone may be enough." [99] The parties cohabited for 24 years and for the majority of this time the functions performed by each party reflected a traditionalform of marriage. Both parties are healthy. Mr.
Stoodley has garnered significant savings and a property on the west coast of the Islandsince separation whereas Ms. Stoodley has had no income aside from spousal support and the amounts payable since separation have notallowed her to save. The parties are both accustomed to a lifestyle that includes significant travel in business class and accommodationsin top quality hotels. Compensatory Spousal Support [100] In the within case, I conclude that Ms.
Stoodley has suffered compensatory loss: • From the parties’ joint decision that she should leave her employment and dedicate herself to the home and children; in doingso her own career and potential financial independence were lost. • Some shares in Lotek were purchased in her name as a means of tax planning/income splitting and the funds for these camefrom the sale of the first matrimonial home; this supports the intention that both parties should profit from the joint venture of theirmarriage. • Ms. Stoodley supported Mr.
Stoodley’s career and accepted the reality that international business required prolonged absencesfrom home which would place a disproportionate amount of family responsibility upon her. • When Mr. Stoodley lost his job at Lotek, both spouses suffered considerable financial hardship and personal stress as describedin the November 2006 affidavit Mr. Stoodley filed in his wrongful dismissal claim. The loss was not suffered by Mr. Stoodley alone;Ms. Stoodley did not abandon the relationship but instead, she assisted her husband through a difficult time. • In 2007, as Mr.
Stoodley’s career with PAL was developing, the Joshua Street property suffered major water damage. Sincethey had no savings, the parties had to do the repair themselves. It took several months of evenings and weekends. There was noevidence that Ms. Stoodley complained about the turmoil the house was in or the time it took to complete; this is another example of thejoint venture of their marriage. [101] Ms. Stoodley’s contribution to the marriage and the family was significant and it was to Mr. Stoodley’s advantage. Ms. Stoodleyhas met the burden upon her to establish entitlement to compensatory spousal support.
Non-Compensatory Spousal Support [ 102 ] As to non-compensatory spousal support, the evidence supports the conclusion that the Stoodley family enjoyed many wonderful adventures associated with the travel that was enabled largely by: (
i) the accumulation of travel points through Mr. Stoodley’s employment, and (ii) Mr. Stoodley’s decision to prioritize travel over debt reduction. [ 103 ] In the early years of the marriage (1994 to 2002) it was most common for the family to travel from St. John’s to the Grand Bank area to visit Mr. Stoodley’s extended family. Airplane travel in this early period was confined to irregular trips to Florida (where they would stay with members of Mr. Stoodley’s family at no expense) or was associated with Amy’s swim-meets/competitions which involved trips to Prince Edward Island and London, Ontario.
There was only one particularly special vacation to western Canada and western United States. [ 104 ] In later years, however, both children would accompany their parents to Europe and on one occasion, Sarah alone accompanied them on a trip to England and Africa for the Great Migration. It was common to piggy-back these types of holidays on Mr. Stoodley’s business travel (by example, on a trip to Australia they snorkeled on the Great Barrier Reef).
Less often, such trips were just spontaneous decisions for the husband and wife to go to Vegas and see Rod Stewart or attend the Gold Medal Plates Event in South Africa. Annual fishing trips to Labrador or Quebec became the custom for Mr. Stoodley and Ms. Stoodley would often accompany her husband. [ 105 ] The accumulation of the travel points also enabled Ms. Stoodley to make frequent visits to Amy while she was a student in the province of Nova Scotia. [ 106 ] The lifestyle to which Ms.
Stoodley became accustomed, particularly in the period 2006 to 2014, included numerous trips a year to unusual and exotic destinations, always in business class travel, staying in the best hotels and with meals enjoyed at the finest of restaurants when they chose to do so. The lifestyle allowed the family to live comfortably in a lovely home on beautifully manicured and maintained grounds in the vicinity of Three Island Pond, Paradise. It enabled each spouse and Sarah to have their own vehicle. Mr. Stoodley’s clothes were purchased from the best men’s clothing stores and Ms.
Stoodley had her hair done regularly in an expensive salon. On their travels it was not unusual for them to purchase artifacts for their home (Turkish rugs, a Taiwanese carving, African masks, an arrow from Malaysia, swords, jewelry for Ms. Stoodley and expensive watches for both). To third party observers the Stoodleys lived the lifestyle of a wealthy family. [ 107 ] Mr. Stoodley had taken a keen interest in the completion of the grounds of the matrimonial home. Construction of a significant gazebo, walkways, driveway lighting, massive deck, orchard, fencing and other projects became labours of love.
With his increased travel, he was not available to dedicate his weekends and evenings to these tasks and it is acknowledged that a handyman provided a replacement service particularly in the period 2007 to 2012. However, without that replacement service since 2014, the matrimonial home has fallen into disrepair. [ 108 ] Ms. Stoodley has not worked outside the home in over 20 years. She is currently 55 years of age and has no marketable skills or recent experience. It is unrealistic that she retrain at this stage of her life. [ 109 ] I conclude on these facts that without support Ms.
Stoodley would suffer economic hardship on the marriage breakdown because she could not possibly maintain the lifestyle that the parties enjoyed before September 2014. Ms. Stoodley has therefore also met the onus of establishing entitlement to spousal support on a non-compensatory (need) basis.
Conclusion on Basis for Entitlement to Spousal Support [ 110 ] Further, like Sawchuk , I conclude that the Stoodleys reached their “ at-separation standard of living due to the steps they jointly took throughout the marriage, without substantial assistance from a third party and without having individually established career paths and standards of living prior to the relationship. ” I accept the view of Justice Langston in Sawchuk that in such circumstances the “objectives of both compensatory and non-compensatory support merge to create a presumption of equalized standards of living upon separation.” (para. 28) Financial Positions of the Parties [ 111 ] The division of the matrimonial assets addressed earlier leaves each party in the following position: Ms.
Stoodley [ 112 ] Once she vacates Joshua Street, it is anticipated that Ms. Stoodley will either receive from Mr. Stoodley or a third party purchaser approximately $70,000 for her one half interest in the matrimonial home. I have already ordered that she receive $680,000 for her interest in the Original Retention Bonus, treated as severance. It is agreed that she will receive a rollover of 48.37 percent of the current value of their combined RRSPs. I estimate this rollover at $400,000. [ 113 ] Ms.
Stoodley will require accommodations for herself and Sarah that do not present the same challenges for maintenance and repair. It is reasonable that the new accommodation be large enough to permit Mrs. Stoodley to pursue her interests in art and entertaining, and Sarah’s interests in mechanics and photography. It must also be sufficient to allow Amy and her family (husband and child) the opportunity to stay during their vacations from Nova Scotia. [ 114 ] The other matrimonial assets that I have addressed will require only a minor adjustment of approximately $10,000 due by Ms. Stoodley to Mr.
Stoodley [*] and I conclude it is appropriate that this payment be collected when the proceeds of the matrimonial home are divided. [ 115 ] As to a reasonable budget of monthly expenses, cross-examination on her financial statement revealed that Ms. Stoodley’s estimates for many expenses were without foundation. Her combined claim for meals outside the home and groceries appeared exaggerated but her estimate for travel and vacation were seriously underestimated (if designed to be a substitute for that to which she
had become accustomed). [ 116 ] The evidence as a whole supports that Ms. Stoodley under-estimated her housing costs. Since she will only receive approximately $70,000 for her interest in the matrimonial home, she will have only a small down-payment. A reasonable estimate of monthly expenses for Ms. Stoodley’s housing (mortgage, insurance, taxes, maintenance, snow clearing, gardening, utilities and security) would be $6,000. [ 117 ] I accept her estimated monthly car payment and operating costs of $1,500.
She is entitled to enjoy the lifestyle to which she became accustomed over the duration of her 24 year relationship which would include generous allowances for her clothing, personal care, gifts for others and frequent travel. Ms. Stoodley gave evidence of her need for specified medical expenses as well as health and life insurance that I have included. In addition, like Mr. Stoodley, Ms. Stoodley needs to accumulate savings before Mr. Stoodley retires. [ 118 ] I estimate below Ms.
Stoodley’s reasonable monthly needs before allowances for either taxes or savings are considered: Housing $6,000 Transportation $1,500 Groceries, meals outside, entertainment, alcohol and supplies $2,000 Personal care, clothing, dry cleaning, donations, church $1,000 Travel $3,000 Medical: dental, optometry, therapy, insurances $1,400 Gifts $1,000 Total $15,900 [ 119 ] Coincidentally, Mr. Stoodley had estimated approximately $17,000 as his own monthly expenses on his December 2014 financial statement. [ 120 ] Once she has received the $680,000 due to her for the bonus, Ms.
Stoodley may be able to generate a small amount of interest income but I estimate this will not exceed $1,000 per month. Mr. Stoodley [ 121 ] If Mr. Stoodley decides to purchase Ms. Stoodley’s one-half interest he will have to raise approximately $70,000. He will be required to rollover 48.37 percent of his RRSPs and pay Ms. Stoodley $680,000 for his Retention Bonus. Although he ultimately received Retention Shares valued at $4,831.898, many were sold. His counsel suggests that he currently holds 84,981 shares valued at $2,401,563 and which should generate dividend income of approximately $144,000 annually.
I am satisfied that he has the financial means to purchase Ms. Stoodley’s one-half interest in the home and pay the $680,000 due by selling some of his shares and without having to borrow money. However, this will reduce his share value from $2,400,000 to $1,651,563 and reduce his dividend income to approximately $100,000 per year [†] . [ 122 ] In the short term, Mr. Stoodley will remain employed with PAL and in receipt of a generous remuneration package. However, it is a reasonable conclusion that he will not remain in the UAE in the long term.
He has plans to remarry next year and testified that he would like to return to Newfoundland and Labrador. Mr. Stoodley’s Income [ 123 ] Wanda Yetman is a payroll clerk at PAL and was subpoenaed by Ms. Stoodley’s solicitor to provide information on Mr. Stoodley’s income and benefits. However, Ms. Yetman explained that while she had heard of the related companies (PAL FZE and PAL LLC), she had no involvement with either and could not provide any information on Mr. Stoodley’s remuneration from either (if any). She had no information to provide on the Retention Bonus to which Mr.
Stoodley was entitled under his July Contract and she had never read the December Contract which replaced the Retention Bonus with Retention Shares. [ 124 ] At the conclusion of Wanda Yetman’s testimony it was clear that despite four and a half years of litigation, the numerous Notices to Reply to Written Questions, Notices to Disclose and Discoveries, Mr. Stoodley had not presented complete and accurate disclosure of his full compensation package. [ 125 ] As I have previously noted in the credibility section, questions posed by counsel for Ms.
Stoodley in the period 2015 to 2018 were eventually answered (although often not comprehensively) and documents were ultimately provided (after months of insistence that they were protected by a confidentiality clause) but overall, the candor required for a full appreciation of Mr. Stoodley’s compensation package was absent. [ 126 ] For example, the February 6, 2019 letter provided by Ms. Yetman on behalf of Provincial Airlines purported to state Mr. Stoodley’s gross earnings for 2018 and 2019.
It suggested that in 2018 he had been paid in U.S. dollars a salary of $189,514.86, estimated bonuses of $234,000.00 and allowances of $34,569.76. [ 127 ] During Ms. Yetman’s testimony, she entered an exhibit which updated this disclosure and suggested that Mr. Stoodley’s 2018 income was a salary of $189,000, bonus of $249,500 and allowances of $7,800, $20,004, and $6,690, all in U.S. dollars. [ 128 ] However, neither of these exhibits referenced the source of income which lead Mr. Stoodley to have a T-4 for $2,386,247 included on his 2018 income tax return.
The evidence at trial subsequently explained that this T-4 represented the transfer of Retention Shares and dividends “in lieu” for that calendar year. [ 129 ] Even with this income tax return and T-4 to supplement the disclosure from PAL’s earlier letter and Ms. Yetman’s revised exhibit, another key piece was missing. Mr. Stoodley had received actual dividends on shares transferred during earlier years and these dividends were not reported on his income tax return.
[ 130 ] Andrew Perry is PAL’s Chief Financial Officer and previous to that, Vice President of Finance. During his testimony at trial it became clear that Mr. Stoodley’s housing, utilities, motor vehicle and travel were also allowances which should be considered in the calculation of Mr. Stoodley’s income. [ 131 ] As a result, I conclude that until cross-examination of Mr. Stoodley was completed during the trial it would have been impossible for counsel for Ms. Stoodley to appreciate Mr. Stoodley’s full financial circumstances.
A fair settlement through alternative dispute resolution mechanisms prior to trial was not possible in these circumstances despite counsel’s due diligence. 2001 - 2014 [ 132 ] The evidence supports the following incomes for Mr.
Stoodley between 2001 and 2014: 2001 $115,332 Plus $8,000 in non-taxable benefits 2002 $173,936 Plus $8,000 in non-taxable benefits 2003 $143,285 Plus $8,000 in non-taxable benefits 2004 $193,728 Plus $8,000 in non-taxable benefits 2005 $112,399 Includes “net” business income 2006 $120,000 Plus bonus, car and RRSP contribution 2007 $120,000 Plus bonus, car, RRSP contribution and settlement from Lotek 2008 $120,000 Plus bonus, car and RRSP contribution 2009 $376,195 Includes “net” business income 2010 $335,855 Includes business loss 2011 $363,056 2012 $371,523 2013 $290,816 2014 $292,689 [‡] Includes bonus, car and RRSP contribution 2015 - 2019 [ 133 ] Mr.
Stoodley’s income after 2014 was far more complicated. In addition to his salary, bonus, RRSP and vehicle benefits, Mr. Stoodley had, at various times, allowances for meals, travel, housing and utilities. As of July 2015 he was paid in U.S. currency.
In addition, as previously indicated, he has received a T-4 in Canadian currency from the Employee Benefit Plan and Retention Trust for the years 2015 to 2018 for dividends in lieu on the shares held by the Trust on his behalf. [ 134 ] In addition, as the terms of his December Contract were met, he received 36,227 Retention Shares in each of January 2016, January 2017, January 2018 and December 2018. These were treated as income. Some shares were sold for withholding purposes but the money was subsequently refunded because no taxes were payable.
Once he held shares outside of the Trust, his own shares also attracted dividends. [ 135 ] As of April 2015, his total income has been non-taxable. [ 136 ] The value of shares transferred was also T-4’d to Mr. Stoodley and treated (in round numbers) as income as follows: $1,028,898 in January 2016 $1,510,000 in January 2017 $1,289,000 in January 2018 $1,005,000 in December 2018 $4,831,898 [ 137 ] I have characterized the value of these shares as an asset, in part matrimonial ($1,360,000) and in part exempt from division ($3,471,898).
In a later section, I shall address whether the non-matrimonial value in the shares and/or any income associated with the shares is relevant to spousal support. Converting to Canadian Currency [ 138 ] Counsel for Mr. Stoodley provided as an aid to the Court a document entitled “Historical Exchange Rates 2015 to 2019 (US to Canadian and Dirham to Canadian)” and suggested that I rely on this to convert Mr. Stoodley’s income year by year. It reflected conversion rates between 1.25 and 1.36. [ 139 ] As will be apparent, I have determined that (for spousal support purposes) it is appropriate to average Mr.
Stoodley’s income in the post-separation years. I prefer therefore to use a reasonable conversion rate of 1.3 for US to Canadian currency for each year. Dividends “in lieu” [ 140 ] In 2015, the Trust held all 144,908 shares on Mr. Stoodley’s behalf. Therefore “dividends in lieu” for that year were significant and amounted to $240,610 Canadian. While counsel for Mr. Stoodley chose to show dividends in lieu in the following year, I rely on a spreadsheet prepared by an accountant engaged by Mr. Stoodley which included them as income in the year they were declared. (See BP#1)
[ 141 ] The $240,610 represented dividends in lieu on Retention Shares valued at $4,831,898. One million three hundred and sixty thousand ($1,360,000) of this has been characterized as matrimonial and the balance as exempt property. Proportionately, the matrimonial portion represents 28 percent. [ 142 ] Twenty-eight percent of the $240,610 should therefore be considered as income on the matrimonial portion of the shares ($67,371) and Ms. Stoodley is entitled to half of this as an asset ($33,685.50).
The remaining $173,239 is income relevant to spousal support. [ 143 ] In 2016, the Trust released 36,227 shares valued at $1,027,398. On the shares it still held, it paid $221,360 dividends in lieu. This represented income on 108,681 Retention Shares now valued at $3,804,500. The portion of this that I have characterized as matrimonial is 8.7 percent calculated as: (1,360,000 – 1,027,398) = 332,602 = .087 3,804,500 3,804,500 Applying 8.7 percent to the dividends in lieu of $221,360 equals $19,258.32 and Ms. Stoodley is entitled to half as a matrimonial asset or ($9,629.16).
The balance of $202,102 is income relevant to spousal support. [ 144 ] After 2016, the remaining shares held by the Trust were not a matrimonial asset and dividends in lieu thereon were therefore not a matrimonial asset. I would consider all dividends in lieu after 2016 as relevant to spousal support. Actual Dividends [ 145 ] Commencing in 2016, Mr. Stoodley received actual dividends on the shares he held. In 2016 this was $34,192 on the shares valued at $1,027,398 but some of which had been sold for withholding purposes.
Because the full $1,027,398 in share value has been treated as a matrimonial asset, the $34,192 income thereon is also a matrimonial asset that should be divided equally between the parties and not treated as income. Mr. Stoodley shall pay Ms. Stoodley $17,096. [ 146 ] In 2017 Mr. Stoodley received $76,133 dividends on the 72,454 shares he had received at a combined value of $2,537,898. One million, three hundred and sixty thousand (or 53.6 percent) of this was matrimonial and it follows that $40,807 of the $76,133 should be shared between the parties. Mr. Stoodley shall pay Ms. Stoodley $20,403.
The remaining $35,326 is relevant to spousal support. [ 147 ] In 2018 Mr. Stoodley received $112,015 in dividends on the 108,681 shares he had received (at a value of $3,826,898) which remained unsold. One million three hundred and sixty thousand (or 35.5 percent) of this was a matrimonial asset and it follows that $39,765.33 of the dividends is a matrimonial asset. Mr. Stoodley owes Ms. Stoodley $19,883. The balance of $72,249 is relevant to spousal support. [ 148 ] By the end of 2018 Mr.
Stoodley had received all the shares held in trust but had sold 60,017 leaving 34,891 in shares which I have characterized as an exempt asset. He anticipates annual dividends of $144,000 on this exempt asset, which income is relevant to spousal support; however, as I have already stated, because he will be required to liquidate shares to pay Ms. Stoodley for the Retention bonus and other adjustments, this dividend income will reduce. RRSP Contribution [ 149 ] The evidence supports that Mr.
Stoodley’s employer’s contribution of $25,000 annually after 2016 has not actually been paid and represents an end of service requirement of UAE law. Since it is properly characterized as a severance for service in the UAE, all of which was post-separation, it does not fall within the definition of matrimonial asset. Since it has not yet been received as income it is not relevant to spousal support. The Remaining Value in the Shares Received as Income [ 150 ] I must now address whether the non-matrimonial portion of both the shares and dividends Mr. Stoodley received should be included in Mr.
Stoodley’s income for spousal support purposes. [ 151 ] The Spousal Support Advisory Guidelines (“ SSAG ”) offer no clear guidance on this unusual situation. However, I find assistance in the Miscellaneous
section of “Beyond the Formulas – Additional SSAG Considerations”, S. Christine Montgomery, 2013 (DivorceMate Software Inc.). There is recognition that post-separation increases in income may be relevant depending upon factors such as the length of the marriage, roles played, when the income was received post-separation and why it was paid. [ 152 ] Section 17(1) of the Federal Child Support Guidelines , SOR/97-175 (the “ Guidelines ”), also assists in the exercise of my discretion here. It states: 17
(1) If the court is of the opinion that the determination of a spouse’s annual income under
section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. [ 153 ] The treatment of income under SSAG and the Guidelines should be the same ( Mason v. Mason , 2016 ONCA 725 , para. 53 ). [ 154 ] I have already concluded that the shares were received as a replacement for the severance package in the July 2014 Contract but that Mr.
Stoodley was required to give additional years of services to receive them. He has received them all and there is no suggestion that Mr. Stoodley will have any future entitlement to shares in EIC. [ 155 ] I would characterize the non-matrimonial portion of the shares that Mr. Stoodley received between 2016 and 2018 ($4,831,000 - $1,360,000 = $3,471,000) as non-recurring income which I conclude should be excluded from consideration for spousal support.
Calculation of Income to this Point [ 156 ] To this point, the conclusions I have reached on Mr. Stoodley’s income are reflected on
Schedule “A”. The highlighted portions reflect portions exempt from income. The Effect of Post-Separation Salary Increases on Spousal Support [ 157 ] As is apparent, even with exclusions for income characterized as an asset, division of matrimonial portions and exclusion of remaining shares as non-recurring income, Mr. Stoodley’s income took a dramatic increase post-separation. [ 158 ] In the period 2009 to 2014, Mr.
Stoodley’s taxable income fluctuated from $290,816 to $376,195, and had an average of $338,356. [ 159 ] Post-2014, before calculation of the line 150 equivalent of his income but after deduction for assets divided and/or shares received that I have characterized as non-recurring income, I roughly calculate that Mr. Stoodley’s annual income has ranged from $584,334 [§] to $1,058,685, non-taxable. In the period 2015 to 2019, his five year adjusted average non-taxable income is $822,486 (see
Schedule “A”). [ 160 ] Mr. Stoodley’s counsel asserts as her primary position that her client’s post-separation income after April 2015 (including its non- taxable status) should not form the basis upon which spousal support is calculated. Instead, counsel suggests that Mr. Stoodley’s income should be limited to that which would have been payable under the July 2014 contract, as if neither the December contract nor his move to the UAE had occurred. Her submissions therefore suggest that Mr. Stoodley’s housing, relocation, travel and food allowances are irrelevant because Mr.
Stoodley did not have them in Canada. [ 161 ] In this regard I accept the following general principles expressed in Thompson v. Thompson , 2013 ONSC 5500 , should guide and inform the exercise of discretion on this issue:
a) A spouse is not automatically entitled to increased spousal support when a spouse's post — separation income increases.
b) The right to share in post-separation income increases does not typically arise in cases involving non-compensatory claims, since the primary focus of such claims is the standard of living enjoyed during the relationship.
c) Compensatory support claims may provide a foundation for entitlement to share in post-separation income increases in certain circumstances. The strength of the compensatory claim and the nature of the recipient's contributions appear to be the major factors which may tip the balance either for or against an entitlement to share in the increased income.
d) The recipient spouse may be permitted to share in post-separation increases in earnings if they can demonstrate that they made contributions that can be directly linked to the payor's post-separation success. The nature of the contributions does not have to be explicit, such as contribution to the payor's education or training. The question of whether the contributions made by the recipient specifically influenced the payor's post-separation success will depend on the unique facts of every case.
e) A spousal support award is more likely to take into account post-separation income increases where the relationship was long-term, the parties' personal and financial affairs became completely integrated during the course of the marriage and the recipient's sacrifices and contributions for the sake of the family and resulting benefits to the payor have been longstanding and significant. When this type of long history of contribution and sacrifice by a recipient spouse exists, the court will be more likel
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